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Non-Farm Payrolls (NFP) May Fail to Prop Up USD Amid Dovish Fed

Non-Farm Payrolls (NFP) May Fail to Prop Up USD Amid Dovish Fed

David Song, Strategist

Talking Points:

- USDOLLAR Rebounds From Trendline Support as ADP Tops Forecast

- EUR/USD Preserves Ascending Channel Formation Ahead of ECB Meeting

- Bullish AUD/USD Setup Vulnerable to Australia/China Data

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10391.06

10398.3

10370.71

0.20

88.99%

USDOLLAR(Ticker: USDollar):

  • Dow Jones-FXCM U.S. Dollar Index rebounds from channel support as ADP Employment (+281K) raises bets for strong Non-Farm Payroll print; current NFP forecast stands at +215K.
  • Need a marked deviation from market expectations to see NFP alter the Fed’s policy outlook.
  • Will continue to favor downside targets as USDOLLAR continues to carve series of lower highs & lows and retains bearish momentum in the Relative Strength Index (RSI).
  • Will retain approach to ‘sell bounces’ in the USD as long as Fed remains reluctant to move away from its easing cycle.

EUR/USD:

  • Looks poised to preserve the bullish channel going into the European Central Bank (ECB) interest rate decision; market participants widely looking for more details on the non-standard measures (TLTRO & QE).
  • See greater risk for verbal intervention as EUR/USD trades above the opening price of the ECB’s June 5 meeting.
  • RSI continues to show risk for a further consolidation in the EUR/USD as it retains the bearish momentum carried over from the end of 2013.

AUD/USD:

  • Appears to have carved a higher-high around 0.9500; 0.9520 (78.6% Fibonacci retracement) .
  • At risk for larger correction should the RSI fail to maintain the near-term bullish structure.
  • Break below trendline support will open up the risk of seeing a move back to 0.9330-40 support zone.
  • Widening trade deficit in Australia may put increased pressure on Reserve Bank of Australia (RBA) to toughen verbal intervention.
  • Australia Retail Sales, Building Permits & China Purchasing Manger Indices (PMI) in focus ahead of U.S. NFPs

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Non-Farm Payrolls (NFP) May Fail to Prop Up USD Amid Dovish Fed

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Read More:

Price & Time: USD/JPY breaking point

ECB Preview: Bullish EUR/USD Setup Vulnerable to Verbal Intervention

USDOLLAR Daily

Non-Farm Payrolls (NFP) May Fail to Prop Up USD Amid Dovish Fed

Chart - Created Using FXCM Marketscope 2.0

  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,354 to 10,375 (50.0 retracement)

Release

GMT

Expected

Actual

MBA Mortgage Applications (JUN 27)

11:00

--

-0.2%

ADP Employment Change (JUN)

12:15

205K

281K

ISM New York (JUN)

13:45

--

60.5

Factory Orders (MAY)

14:00

-0.3%

-0.5%

Fed Chair Janet Yellen Delivers Lecture at IMF in Washington

15:00

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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